I had a similar situation happen to me when I went to highschool. except it was my friends mom who narced on me. i still hate that bitch, forcing her opinions on people.

I think maybe the best thing to do would be to discuss this in a cool collected manner with your mom. explain to her that despite your friends involvement, its really not her place to bust him down. sometimes parents think that they're the anti-drug for the whole world.

take it on yourself to talk to your friend, and tell him whats up, like maybe dealing drugs isn't such a good idea and that your out of the biz.
If your mom goes to his parents he'll resent their authority, if you talk to him he's more likely think about the situation from his own perspective.
let your mom know that this shit is part of life but that there is no reason to extend punishment outside your household.
plus, if he's your friend he'll understand that it's your mom who busted him not you.